The regeneration of London’s Paddington will take a further step forward with the development of a 620-room hotel and aparthotel complex. The tenants of the scheme will be Premier Inn and Staycity Group and it is expected to open by 2021.
M&G has acquired the long leasehold interest of the development site and will finance the construction of the hotel complex to be carried out by development consortium, Concierge 3 Limited (a joint venture partnership between The Pickstock Group, Staycity and BSW Land & Property Ltd). The capital is provided by the £4.1 billion M&G Secured Property Income Fund, which invests in UK real estate assets let on long-term leases, usually with rents that increase in line with inflation.
Under the terms of the deal, Whitbread plc, the owner of Premier Inn and Staycity will each take 30-year leases on five-yearly inflation-linked rent reviews, operating independently with 60% and 40% of the rooms respectively. The ongoing transformation of the area and its excellent transport links continue to improve Paddington’s desirability as an office and leisure location, strengthening demand for accommodation from business and leisure visitors. The scheme also has provision for a 27,000 sq ft education facility, landscaping and open space.
Staycity, a leading aparthotel operator, will provide the aparthotel side of the development under its premium brand Wilde Aparthotels by Staycity, consisting of smart, design-led studios and one-bed spaces which will enable guests to relax, cook and work in inspiring interiors. Whitbread will provide the latest generation 373-bedroom Premier Inn hotel, which will be its first in Paddington.
This is the Fund’s fifth transaction with Whitbread as a tenant, following a £100 million funding deal to develop a 339-room hub by Premier Inn hotel on Tothill Street, Westminster, adding to the existing portfolio of Premier Inn hotels at Gatwick Airport North Terminal, Holborn and Wandsworth.